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Kate Holton, Keith Weir18 Jul 2011 06:24
A phone-hacking scandal centred on Rupert Murdoch’s News Corp cost Britain’s top policeman his job and renewed questions on Monday about Prime Minister David Cameron’s judgment.
British newspapers reported that Cameron was cutting short an Africa trip to fly home to deal with the crisis that has shaken Britons’ faith in the police, press and political leaders.
Two top Murdoch executives have quit and the Australian-born media baron has shuttered his News of the World tabloid that was at the heart of the phone hacking, and abandoned a $12-billion deal to buy up British satellite broadcaster BSkyB .
The snowballing scandal took a toll on News Corp’s Australian shares which fell 7.6% to as low as A$13.65, their lowest since July 2009, and a 7.4% discount to News Corp’s last US close, implying $3-billion of market capitalisation would be wiped out when US trade resumes.
In Britain, detectives arrested Rebekah Brooks, former head of News Corp’s British newspaper arm, on suspicion of intercepting communications and corruption.
Brooks, who once edited the News of the World, was released on bail at midnight on Sunday, about 12 hours after she went to a London police station to be arrested, her spokesperson said. Brooks has denied any wrongdoing.
Analysts said the gathering pace of heads rolling had turned up the heat on Cameron and Murdoch over their handling of the scandal, with the media tycoon due to be questioned by Parliament in a possible showdown on Tuesday.
The Guardian said Cameron was flying home from Africa on Tuesday to allow him to finalise the arrangements for an inquiry headed by Lord Justice Brian Leveson, appointed by Cameron to look into phone hacking allegations at News Corp.
The Financial Times said the prime minister was returning to fend off criticism that he was out of the country in the midst of the scandal, which reached a boiling point over the alleged hacking of the cellphone of a teenage murder victim.
The News of the World, which published its final edition a week ago, is alleged to have hacked up to 4 000 phones including that of murdered 13-year-old Milly Dowler, sparking the furore that forced Murdoch to close the paper and drop his bid to buy all of highly profitable BSkyB.
Paul Stephenson, London’s police commissioner, quit on Sunday in the face of allegations that police officers had accepted money from the tabloid and had not done enough to investigate hacking charges that surfaced as far back as 2005.
The trigger for his resignation was revelations he had stayed at a luxury spa at which Neil Wallis, a former News of the World deputy editor, was a public relations adviser.
Wallis, also employed by police as a consultant, was arrested last week in connection with the phone-hacking scandal.
“I had no knowledge of the extent of this disgraceful practice [of phone hacking],” Stephenson said in a televised statement.
Feared compromising Cameron
He added that he had not told Cameron about Wallis’s employment as a consultant for fear of compromising the prime minister because of Cameron’s relationship with Andy Coulson.
Coulson, who resigned as editor of the News of the World in 2007 following the jailing of a reporter for phone hacking, later served as Cameron’s press secretary, but resigned after police reopened the phone-hacking inquiry earlier this year.
“I did not want to compromise the prime minister in any way by revealing or discussing a potential suspect who clearly had a close relationship with Mr Coulson,” Stephenson said.
Coulson was arrested in connection with the phone-hacking inquiry on July 8.
The scandal has raised concerns not only about unethical media practices but about the influence Murdoch has wielded over British political leaders and allegations of cosy relationships between some of his journalists and police.
Cameron has come under fire for his friendship with Brooks and for employing Coulson as his press secretary.
Tim Bale, politics professor at the University of Sussex, said: “It has become almost a crisis of governance in the United Kingdom. [Stephenson’s] resignation takes us beyond a few bad apples ... There is a sense of things sliding out of control.
“The actual text of [Stephenson’s] statement pointing to parallels between himself and the prime minister is quite breathtaking. It won’t make Mr Cameron do the same thing, but it reminds people once again of the Coulson problem.”
The opposition Labour Party, which has capitalised on Cameron’s discomfort, seized on Stephenson’s reference to the Coulson appointment in his resignation speech.
“It is striking that Sir Paul Stephenson has taken responsibility and answered questions about the appointment of the deputy editor of the News of the World,” Labour home affairs spokesperson Yvette Cooper said in a statement.
“The prime minister still refuses to recognise his misjudgment and answer questions on the appointment of the editor of the News of the World at the time of the initial phone hacking investigation.”
“It is also a very serious concern that the Met Commissioner [Stephenson] felt unable to tell the prime minister and the home secretary about this operational issue with Neil Wallis because of the prime minister’s relationship with Andy Coulson,” Cooper said.
Cameron took office last May at the head of a Conservative-led coalition that has made cleaning up the public finances its priority.
With politicians from Australia to the United States demanding to know if similar abuses occurred elsewhere in Murdoch’s global media business, the 80-year-old has been forced on the defensive and the position of his son James as heir-apparent has been called into question.
Brooks and Rupert and James Murdoch are due to be questioned by Parliament on Tuesday, including over reports that News International misled legislators during earlier hearings.
But Brooks’s spokesperson said her arrest might cast doubt on whether she could appear before politicians.
“Anything that will be said at the select committee hearing could have implications for the police inquiry,” said David Wilson, adding Brooks was “shocked” by the arrest.
The Financial Times reported on Monday that Labour legislator Tom Watson had written to the Serious Fraud Office (SFO) asking it to investigate payments he alleged were made by News Corp to cover up the scandal.
A SFO spokesperson said he did not know if the letter had been received but that the agency would take such a request “very seriously”.
Murdoch, who some media commentators say at first misjudged the strength of public anger, published apologies in several British newspapers at the weekend.
He lost another loyal executive on Friday when Les Hinton, another former head of his UK newspaper business, resigned as chief executive of Murdoch’s Dow Jones which publishes the Wall Street Journal. - Reuters
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